How to Build a Risk Ready Organization...Risk-adjustment methodology 3. Quality parameters/measure congruence across contracts 4. Data sharing ... • Developing a financial roadmap

How to Build a “Risk-Ready” OrganizationHFMA Western Region Symposium

January 14, 2020, 12:45 – 1:45pm

LUMINA HEALTH PARTNERSLUMINA HEALTH PARTNERS2LUMINA HEALTH PARTNERS

Session Agenda

1. Preparing the Organization for Risk

2. Basics of Value-Based Contracting

3. Blueprint for Managing Risk

4. Value Models and Return On Investment

Preparing the Organization for Risk

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LUMINA HEALTH PARTNERSLUMINA HEALTH PARTNERS

Shift to Value-Based Reimbursement is Slow but Proceeding

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Market Perspective

• Value-based care (VBC) is here to stay‒ ACOs saved Medicare $755M in net savings from

2013 to 20171

• Medicare expands VBC payment models and commercial (Medicare Advantage) programs

• All commercial payers have ACO/VBC programs to transfer risk with the intention of building narrow, high-performing networks

• Provider organizations continue to struggle with the pace of VBC change and decreasing margins

1 Dobson, DaVanzo & Associates analysis

http://www.google.com/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&docid=qMV2wVWKZe3vYM&tbnid=GPrI-tsyk-CZ0M:&ved=0CAUQjRw&url=http://www.ideachampions.com/weblogs/archives/2011/04/1_it_is_not_the.shtml&ei=R3J1U8PJKsenyATKhoKICw&bvm=bv.66699033,d.aWw&psig=AFQjCNHnZbJi30_O05xYEQ_fKsiJN9WtmA&ust=1400292258639143


How are organizations responding to financial challenges?

By creating a balance between meeting the vision/mission while funding capital needs and ensuring long-term financial stability

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Questions CFOs are asking

1. How quickly do we shift in value-based care while not compromising net margins? How do we know when we are ready to assume risk?

2. How do we protect our fee-for-service revenue as we assume value-based contracts?

3. How do we decrease our internal costs to align with Medicare reimbursement rates?

4. How do we efficiently manage the shift in utilization?

5. How do we ensure incentives are aligned (physician, hospital, payer, patient)?


Keys to Success

Successful provider organizations take a focused, yet pragmaticapproach as they transition into value-based reimbursement

Basics of Value-Based Contracting

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Value-Based Contracting Brings Together….

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Managed lives (assigned, attributed) obtained through market contracting activity and subject to certain performance expectations

Financial risk incentives to manage the population

Provider network attuned to the VBC “program”

VBC infrastructure to support providers in meeting population health responsibilities


Important Attributes of Value Based Contracts

Transition to Downside Risk: Most payers will agree to a reasonable continuum to downside risk that enables providers to develop VBC capabilities.

Access to New Patients: Now and in the future, payers are developing narrow network products around VBC arrangements, and more specifically, ACOs that perform well under these arrangements.

Value-Based Payments: Shared savings provides additional opportunities to increase provider reimbursement from the base FFS, which is decreasing or being eliminated entirely.

Collaboration: VBC arrangements serve as an avenue to grow payer relationships and partner under value-based care.

Glide Path to Risk

Product Growth

Enhance / Preserve Reimbursement

Partnership

Access to Data / Market Intelligence

Data Mining: VBC arrangements provide substantial data and analytics that enable providers to analyze their population of patients. This makes the data actionable for care management, patient retention, and cost efficiencies in respect to FFS.

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Key Components of a Risk-Based Contract

• Primary value-driver(s) and leverage points within negotiation

• Minimum contract elements to best balance risk and return

• Data and information transparency

• Timing of risk transfer

• Attribution methodology

• Quality funding

• Stop loss

• Market cost trends

• Reporting/reconciliation

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Six Important Elements to a Successful Value-Based Contract

1. Attribution methodology/roster control

2. Risk-adjustment methodology

3. Quality parameters/measure congruence across contracts

4. Data sharing

5. Shared savings calculation methodology/risk model

6. Reconciliation/audit and appeal rights

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Financial Model to Understand Contract Exposure

Value-based contract financial models help leaders understand the contract’s:

1. Success drivers

2. Impact levers

3. Areas of vulnerability


Key Terms

Shared Savings Calculation

Quality Measures and Care Management

Data Sharing

Provider/Member Attribution

Cost of Care (PMPM)

Risk Adjustment

Value-Based Contract Products

Patients

Value-Based Contract Financial Model

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Building the information-

management platform from data, to information, to knowledge is the foundation of a good value-based contract.

http://www.google.com/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&docid=jV6zFO3w8osgMM&tbnid=I1OE_w01AXuq4M:&ved=0CAUQjRw&url=http://alnahdaoverseas.com/employers&ei=MNx8U7LsLMayyATJmIKQBQ&bvm=bv.67229260,d.aWw&psig=AFQjCNFdQpI2ELDf1VSWd5OI-hqtRwHVrQ&ust=1400778141192477

http://www1.imperial.ac.uk/cpssq/p/


Data Needed to Yield Contract Insights

Contract Analytics

Contract Terms

Clinical Data

Payer Data

VB Analytics

Negotiation Playbook

Financial PlaybookWho to impact

What to impact

Billing Data

Patient Profile Data

Cost Data

Timely, accurate insights into risk

contracts

Improve current year financial performance

Improve contract terms next year

Identify operational strengths

Negotiate terms that play to strengths

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Blueprint for Managing Risk

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Aligning Risk Tolerance to the Financial Impact

• Developing a financial roadmap for the organization by setting sufficient and realistic

financial performance targets

• Maintaining or improving the financial position of the organization within an

appropriate risk context

‒ Begin by quantifying the shift in utilization

• Managing the operating and capital budgeting processes

• Creating and distributing financial analyses and reports

• Understanding the financial impacts/risks of new government mandates and

regulations

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Blueprint to Managing Risk

1. Aligned provider-driven governance and culture

2. Create the infrastructure to help physicians and providers succeed

3. Understand where to start and the greatest “area of opportunity”

4. Identify the levers (expense and revenue) for managing the population and costs

5. Identify the medical spend by cohorts and critical influencers

6. Identify important relationships between practice patterns and outcomes

7. Predict the likelihood of favorable and unfavorable outcomes (sensitivity analysis)

8. Understand risk stratification and its impact on medical spend, utilization and care delivery

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Understanding the value-based contract elements’ factors and levers creates an aligned “risk-ready” vision


Capabilities required for success:

• Strong executive leadership with a clear vision and unwavering focus

• Strong physician leadership with a role in governance of the network

• Transparent and aligned financial accountability, tied to quality, efficiency, and performance for all

leadership and clinical providers

Creating a Culture of “Risk-Readiness”

Implementation Infrastructure Integration

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Implementation: Critical Steps to Succeed

Transparent data-sharing among all ACO health delivery partners

Regular committee meetings with members of senior management and physician leaders to advance initiatives

Align VBC contracts, investment requirements, financial models and utilization management

Annual review and adjustment of budget models for future positioning for increases in risk tolerance

Actionable Analytics

Aligned Governance

Financial Performance

Managing Future Risk

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• Strong leadership

• Ability to change the existing health delivery model

• Ability to establish strong teams and common culture

• Ability to mediate and solve stakeholder issues/risks

• Ability to change the model as population evolves

• Strong governance structure

• Ability to articulate and implement strategy and management

performance targets

• Ability to access and efficiently deploy capital

Implementation: Leadership and Governance

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Population Health Management

Ris

k -

Co

st

5%

15 - 30%

65 - 80%

Risk-Rising PatientsChronic, aging, chronic condition–unmanaged

Low-Risk PatientsHealthy or chronic condition-managed

High-Risk PatientsOne complex illness, multiple co-morbidities

Population

Current Focus

ACOs/CINs Opportunity to Expand Market Services &Share

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Data Drives Contract Performance and Success

• Obtaining “usable” data is the top issue for ACOs

• Access to historical claims data is key

• Consistent data format, level of detail for “in-area, out-of-network” claims

• Compatibility with ACO’s analytic systems

• Recommend attaching specified claim file layout as part of contract

Knowledge

Data

Information

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Analytics Growth Curve to Value

Raw Data

Data Aggregation

Retrospective Reporting

Dashboard Reporting with

KPIs

Artificial Intelligence

Causality Modeling

Predictive Modeling

Digital Innovation

Population Health Insights (Social Determinants,

Spend, Utilization, Condition Mgmt.)

BasicAnalytics

AdvancedAnalytics

Performance Insights

Capabilities

ValueRepresents most

provider organizations

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Strong Revenue Cycle Processes Offset Risk Exposure

Insurance

Verification

Scheduling

Billing/Claim

Adjudication

Payment

Posting

Denial

Mgmt.

Coding (ICD-10, HCC)

Provider Revenue

Cycle Functions

Member

Attribution

Enrollment

Eligibility

Claim

Adjudication

Rejection

Mgmt.

Utilization/

Mgmt.

Member

Deductible

Payer Revenue Cycle

FunctionsValue-Based Revenue

Cycle Functions

Pre-Cert

Process

Risk Coding/

Documentation

Data

Transparency

AWVs and

HCCs

Referral

Mgmt.

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Value Models and Return On Investment

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Economic ‘Value’ Models Guide Investment and Expected Return

ROI Calculator Utilization Analyzer Predictive Modeler

Provides a quantitative framework for performance monitoring, investment, and financial decision-making:

o Investments required to build and expand programs

o Organizational impact on revenue and expenses providing sensitivity analysis

o Forecast the pace of change and its impact on the organization’s financial performance

Enables an organization to evaluate revenue and expense implications related to:

o Care management intervention

o Clinical performance programs

o Care settings across network providers

o Utilization management across care settings

o Risk stratification

Provides opportunities to move into prospective outcome forecasting and risk analysis. Allows organizations to:

o Anticipate outcomes-based population and program variables

o Provides statistical analysis to identify dependent and independent variables affecting program outcomes

o Allows for prospective risk contracting and expanded care-management reconciliation with payers

Value ModelCharacterized and defined by:

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Building the Value Model’s ROI Calculator

Translate large amounts of structured and/or unstructured data into actionable insights

Identify important relationships between practice patterns and outcomes

Identify specific levers (expense and revenue) for improving quality and reducing cost

Move beyond understanding trends to understanding why trends are occurring

Predict the likelihood of favorable and unfavorable outcomes

Understand and stratify risk

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Benefits of

advanced

data mining,

infrastructure

investment

and contract

performance


In Summary

• Healthcare is continuing the transformation into value-based care reimbursement

• Provider organizations must understand their distinctiveness in providing value within a payer contractual arrangement

• Investments in value-based care initiatives requires an understanding of the financial implications of the contracts and operational factors

• As provider organizations negotiate the contract terms, it's important to build a financial model to reflect the financial implications and impacts on revenue

• The contracted financial model allows CFOs to be more prescribed in their investment and financial planning

“Understanding where to focus is the key to building a “risk-ready” organization”

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Question and Answer Session

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DANIEL MARINOMANAGING PARTNERLUMINA HEALTH [email protected]

mailto:[email protected]

Documents

How to Build a Risk Ready Organization...Risk-adjustment methodology 3. Quality parameters/measure congruence across contracts 4. Data sharing ... • Developing a financial roadmap